Employment Update
September 2004


A Brief Summary of Recent Changes in California Employment Law

Make Sure Your Employees are Taking a Meal Period and Breaks

California Labor Code § 226.7, which took effect in January 2001, requires an employer to pay one additional hour of pay for each work day that the employer fails to provide an employee a meal period or rest period under the applicable Industrial Wage Order. In the last two years, numerous class actions have been filed alleging wage and hour violations. These suits can be very expensive if an employer is found to have violated the wage and hour laws.

We recommend that employers review their break and meal period policies: Employees should be required to accurately note all breaks on their timecards, and to verify the accuracy of the time submitted by signing the timecard. These timecards will then be strong evidence of compliance if you face a complaint.

Beware: Employers May Be Liable for Bank Fees Imposed on Employees for Cashing Paychecks

Labor Code § 212 provides that no person, agent or officer shall make a payment of wages due unless that payment or "check" can be cashed without a fee. This 1937 statute is suddenly a focus of attention because certain banks have begun charging a $5.00 fee for cashing paychecks drawn from an account at that bank, when the employee does not have an account there.

The Division of Labor Standards of Enforcement (DLSE) has indicated that the employer is violating Labor Code § 212 each time an employee is charged a fee to cash their paycheck at the employer's bank. The DLSE imposes civil penalties per violation. The penalties can be more than $100 per violation, which can add up quickly, particularly if many employees are affected.

We highly recommend that employers check with their bank to ensure that employees are not being charged to cash their paychecks. If your bank imposes such fees, you may be able to negotiate with the bank to waive the fee for your employees. If not, you should consider changing banks - the threat of which may get your bank to change its practice.

Employees Can Now Bring Civil Actions Against Employers For Labor Code Violations

The Private Attorney General Act of 2004, more commonly referred to as the "bounty hunter" law, amended the Labor Code to permit employees to bring civil actions for Labor Code violations and imposes civil penalties for violations. Previously, the DLSE was charged with enforcing most Labor Code violations and employees could not file civil suits directly against their employer. Filings of civil actions alleging labor code violations have sharply increased since the bounty hunter law was enacted. Legislation revising Labor Code Section 2699 is currently pending and it is possible that the far reaching effect of this law will be limited within the next year. In the meantime, we recommend that employers conduct a thorough employment law compliance audit.

Note: A single disgruntled employee can now bring a claim for all Labor Code issues, on behalf of any number of employees. This is a dangerous situation, and you need to make sure your employee handbooks, policies and training are all up to snuff, to protect against unfounded claims and unscrupulous lawyers.

Employees May Receive Paid Family Care Leave

The California and Federal Family Leave Acts require employers with 50 or more emplyees to grant an employee unpaid family leave for time to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a new child. Those acts also guarantee reinstatement when the leave ends. As of July 1, 2004, under the new Paid Family Care Leave Act (PFCLA), eligible employees may receive payment of up to six weeks of benefits when they must take time off of work for those same reasons.

The PFCLA is a partial wage replacement law, funded by payroll deductions from employee contributions to the state disability insurance program. It is independent of the other Family Leave acts; it is not limited to large employers, and an employee is eligible to apply to the Employment Development Department for Paid Family Leave any time after becoming employed, although he or she must wait seven days before receiving benefits. Employers must notify their employees of their rights under the PFCLA, and should have a comprehensive family leave policy in place.

Begin Preparing Now -- It is likely that the California Minimum Wage will increase in 2005.

AB 2832, currently pending in the California Assembly, would raise the minimum wage in California to $7.25 in 2005. The state Senate voted to approve the bill on August 19, 2004. Under the current version of the bill, the increase would take effect July 1, 2005. This bill also provides for another increase in the minimum wage on July 1, 2006, to $7.75 per hour.

The IWC Ceases Operation

As of July 1, 2004 California's Industrial Welfare Commission ("IWC") is no longer in operation. The IWC, established almost 100 years ago to review, issue and amend rules regulating the wages, hours and working conditions of California workers, was defunded by the Legislature. However, existing IWC wage orders are still in effect; they must be posted by all employers, and the DLSE continues to enforce them.

Whistleblower Posting Now Required

Effective January 1, 2004, California employers must prominently display a posting explaining employees' rights and responsibilities under the whistleblower laws, in lettering larger than size 14 font. Employers are urged to review their employ ment postings to ensure that all required notices are properly posted.

California Extends Statute Of Limitations On Personal Injury

Statutes of limitations are laws which govern how long after an injury occurs the injured person has to file a lawsuit. In a remarkably little noticed act, the California legislature extended the statute of limitations for personal injury and wrongful death actions from one to two years. This change is significant for businessses because personal injuries include not only phyical injuries, but also such claims as discrimination and wrongful termination. Somewhat surprisingly, the statute of limitations for libel and slander remains one year.

While the extension was mainly intended to give 9/11 victims more time to decide whether to sue or seek compensation from the victims' fund, it doubled the time any personal injury plaintiff will have to bring suit. A California court has already decided, however, that the new rule does not apply retroactively (except to the 9/11 attacks) to revive claims which were already barred by the statute before the change went into effect January 1, 2003.

For businesses, this means that potential plaintiffs now have an extra year in which to file suit. Thus, your procedures should be to keep records which might be useful in defending a personal injury action for at least three years. Bearing in mind that claims could be made by customers, employees or even passers by, your retention policy should cover any contemporaneous records: at a minimum, security camera tapes, log books, and register tapes, as well as discipline, incident or accident reports should be retained.

This update is only a summary. The Law Offices of Peter A. Singler can help you understand the full impact these changes in the law may have on your business. If you have any question, please contact Sandra G. Wickland or Bruce Napell at (707) 823-8719 or SGW@singler-law.com / BJN@singler-law.com..

Law Offices of Peter A. Singler copyright ©1999-2004.